MoneyGram International Inc. (MGI)

Credit Suisse Global Services Conference Call

March 12, 2012


Pamela H. Patsley – Chairman and Chief Executive Officer


Jim Francis Kissane – Credit Suisse (United States)


Jim Francis Kissane

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Okay, times running. So I think we'll get going. My name is Jim Kissane. I cover services stocks for Credit Suisse and it's my pleasure to introduce Pam Patsley, the Chairman and CEO of MoneyGram and with Pam is Alex Holmes who runs Corporate Strategy and Investor Relations. After the formal presentation, we'll probably have few minutes for Q&A here. And then there'll be a breakout session in salon G.

So, let me hand it over to Pam. Thank you, Pam.

Pamela H. Patsley

Thanks, Jim. It's great to be here and good afternoon. So, we will start with a quick overview of MoneyGram and a little bit first about who we are and MoneyGram is the second-largest money transfer company and we have market-leading growth. Our vision is to be the preferred provider or network of how consumers and businesses want to send money and receive money around the world.

We have a compelling suite of products and service offerings. We operate through 267,000 points of location around the world and our strong brand is present in a 192 countries. Today we are headquartered in Dallas. We had about $1.25 billion in revenue last year for full year 2011, 2,350 employees or thereabout located around the world. And today 71% of our stock is owned by private equity, 52% THL, 19% Goldman Sachs.

You can see in the chart on the right a breakdown of our revenue by product. And so Global Funds Transfer segment is the value creating engine of MoneyGram and it's 92% of our total revenue, 83% money transfer and 9% bill pay and financial services, excuse me, Financial Paper Products just 8% of our revenue.

For those of you who know MoneyGram from the past, you certainly know the quality of our revenue has changed quite dramatically.

2011 was a great year for MoneyGram. And you see here some numbers for Q4 and full-year 2011. And if I think about our business of what drives growth, as a funnel if you will, and we start with our agent network or points of presence. We grew 18% and closed the year at 267,000 points of presence.

Our transaction volume growth thus grew to 13% for the quarter, 14% for the year. And really, we target double-digit transaction growth. That's kind of what we align the internal folks many of you have heard me talk about. It's about double-digit growth, network growth and transactions.

We have three primary buckets; U.S.-to-U.S., U.S. outbound and sends originating outside the U.S., all solidly hit double-digit growth, both for the quarter and for the year. And we have market-leading growth there as a subset of that U.S. outbound in sends to Mexico at a very strong 15% for the fourth quarter.

All this yielded really strong revenue growth. On a constant currency basis we were there for the year at 10% and for the quarter at 11%. And we're really excited about the market in which we participate. This is a great industry; it has seen continual growth except for 2009, but at the bottom of this chart you can see MoneyGram's revenue growth and even when the industry shrank in 2009 MoneyGram saw growth.

This is going to continue, and we see very exciting industry because of – more than 200 million immigrants migrate for work for a better way of life, for education annually. We continue to see in the developed countries an aging population and a very low birth rate. So guest workers are very, very important to just maintain let alone grow GDP. So MoneyGram continues to outgrow a growth market.

As I said, we are the number two player in this industry, and steadily gaining share 2% in 2005, 5% in 2011 and we hope that continues to grow at hopefully and even accelerating rate. It's a highly fragmented industry and you can see in that pie chart on the right there is a lot of white space for us to capture share. And there is – really only two players that are present in kind of the 190 plus countries around the world, tremendous amount of niche players, some regional players, banks as I like to say kind of episodically are in this business or maybe just oriented around a quarter or two.

And then of course, you have the informal channel. And we're seeing and here’s where government is a help, we’re seeing that they continue to be interested in driving these transactions to a formal channel.

So the network is expanding and driving growth, again these three categories, the pie chart at the top there, these two pie charts on the left are based on fourth quarter data. So on a transaction basis, our business is divided about a third, a third, a third, U.S.-to-U.S., U.S.-outbound and sends originating outside the U.S.

However if you look at revenue for that same period you’ll see due to a higher RPT or revenue per transaction are sends originating outside the U.S. are a much larger part of our revenue pie. And that’s very exciting because this is the area where we have really some tremendous growth opportunities.

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